The broad aim of this project is to elucidate the transcription factors that control chondrocyte differentiation during vertebrate development. Prior work in my lab has established that Sonic Hedgehog (Shh) and Wnt signals pattern somitic cell fate. We have recently found that one of the genes induced by Shh, Nkx3.2, confers competence for subsequent BMP signals to induce chondrogenesis. Activation of somitic chondrogenesis by Nkx3.2 requires BMP signaling and correlates with the ability of this regulator to induce the expression of another chondrocyte transcription factor, Sox-9. We have found that the transcriptional repressor activity of Nkx3.2 requires interaction of Nkx3.2 with both BMP-dependent Smads and histone deacetylases and is necessary for Nkx3.2 to induce both somitic chondrogenesis and Sox-9 gene expression. Forced expression of Sox-9 in somites can similarly induce competence for subsequent BMP signals to induce chondrogenesis. Together, these findings suggest that Nkx3.2 induces a prochondrogenic state in somites by repressing the transcription of an inhibitor of Sox-9 expression. Later in development Nkx3.2 is specifically expressed in immature cartilage in the developing limb bud and is excluded from regions of chondrocyte hypertrophy. Forced expression of Nkx3.2 throughout the limb bud blocks chondrocyte maturation and chondrocyte hypertrophy. The transcriptional repressor activity of Nkx3.2 is necessary for this transcription factor to block cartilage maturation, and suggests that Nkx3.2 blocks the transcription of a factor(s) required for cartilage maturation. Our findings indicate that Nkx3.2 plays a role in the generation and maturation of cartilage cells. In this proposal I outline a series of experiments to address the following specific aims. (1) Determine how BMP-dependent SMADs promote chondrogenesis. (2) Determine if GATA genes repress a chondrogenic response to BMP signaling (3) Determine how Nkx3.2 represses chondrocyte maturation. (4) Determine if other Nkx family members expressed in the developing bones act together with Nkx3.2 to repress chondrocyte maturation.